Sunday, February 28, 2010

Does the Decline of the Democrats mean the Decline of the Republicans?

As the Democrats crash and burn, the biggest challenge facing Republicans is Republicans. It is easy to be opposed to liberal madness,and it certainly has been gratifying to watch a majority of the American people vehemently reject the left's road to socialist serfdom. However, opposing madness does not equate to promoting sanity. Republicans have famously fumbled the ball whenever it has been handed to them - as they are now doing. After all, when the smoke clears from the Democrat's smoldering morass of Big Government impolicy, the logical next question always must be: "what would you do"?

The reason the Republicans continually fail is because they do not have a logically consistent philosophy. To the extent they advocate any fundamental ideology, it is, in fact, entirely consistent with the essential premises embraced by the left, i.e., the morality of altruism orthe view that self-sacrifice is moral and self-interest is evil. Their failure to challenge the morality of the left or, even worse, the active adoption of this ethos, renders them unable to defend individualism, limited government, and free markets. Worse yet, many Republicans attempt to defend capitalism on religious or mystical grounds which concedes to their opponents that freedom has no rational justification and implies that science and reason are actually on the side of the busy bodied Central Planner. Because they do not challenge the welfare state morally, Republicans can only slow the drift towards socialism, getting dragged along while kicking and screaming.

In my post, Why Republicans Keep Failing, I wrote:

The Republicans overtly promote "free markets" and pro American foreign policy without understanding why this is morally right. Capitalism is rightly associated with profit making and self-interest. If you attempt to justify self-interest on the grounds of altruism you will be perceived as unconvincing and hypocritical. ...Their acceptance of the morality of altruism also explains why, in reality, when it comes to policy, the Republicans can not actually implement free market programs or execute all out war on our military enemies. It explains why they are unprincipled, because, under altruism, they can not act on principle without acting like Democrats. The Democrats do not suffer from this contradiction. The Democrats support government intervention in the economy which is consistent with the popular notion that business is selfish and evil. ...They are viewed as "idealistic" and "well-intentioned" albeit "impractical" (or simply "flawed" to the extent that they are personally despicable).

America has been drifting towards statism since its founding. The only way to stop the procession is to understand why freedom and capitalism is the moral system and to proudly and unapologetically defend it.

The Republicans will not change overnight. However, given the current political upheaval and in the wake of the nascent Tea Party movement, I believe there is a real chance to begin making over the Republican Party. This is already happening as primary races increasingly pit traditional Republicans against more libertarian leaning Republicans. For example, in the Kentucky primary for U.S. Senate, Ron Paul's son, Rand Paul, a fiscally conservative physician, is running against a traditional Republican pol, Trey Grayson. Paul is currently up more than 15 points in the primary polls. This is a good sign, but it is not enough.

Republicans should not simply mouth grandiose rhetoric without a concrete plan, nor should they myopically bury themselves in the minutia of policy outside of a larger ideological context. If Republicans want to lead rather than just obstruct, they must adopt and articulate concrete action, but they must do so on the basis of a consistent, principled philosophy.

Anyone who follows my blog will understand that I am a radical for individual rights and capitalism, and that this view is predicated fundamentally on the basis of reason and the morality of egoism or rational self-interest. While such a view entails a political agenda strongly consonant with the Founding Fathers vision of a strictly limited government, it also goes further in explicitly prohibiting the abridgement of the freedom of production and trade, i.e., it entails the complete separation of state and economics. An entirely unadulterated program of policies based on this view, while logically consistent with the requirements of happiness and the prosperity and advancement of human life, are politically impractical in the short run. Therefore, I advance several concrete policy proposals below which I believe could be articulated and defended in the current political environment. They would serve as a counter-offensive to the socialist onslaught of the Obama administration both in principle and in action. The policies themselves would not only be practically sound, they would serve to illustrate the wider principle that individual rights and free markets are practical and moral. In contrast to the recent M.O. of the Republican party, comprised of ad hoc reaction and milquetoast compromise, these policies could be the foundation of a new Republican party that seeks to lead on the basis of fundamental principles. Alternatively, they could be the policies adopted by any party that values human life and well being.

PROPOSED:

The fundamental role of government is to protect property and person. The Constitution enumerated the specific role of the federal government while delegating all other powers to the states. The federal government has far overstepped its constitutionally enumerated powers. Not only does the federal government intrude on virtually every aspect of our personal and economic life, it's bloated expenditures have wasted the earnings and capital of the most productive burdening both the present and the future with trillions of dollars of debt.

1. We will submit a balanced budget to the President of the United States

2. In order to accomplish this goal, the budget will rely solely on cuts to current government spending, not on tax increases.

The government is not a productive enterprise and it does not create wealth. It can only create the conditions for individuals and businesses to create wealth. So-called "stimulus" spending is worse than a zero-sum game. Robbing Peter to pay Paul is nothing but a transfer of wealth. In fact, it is worse since it siphons capital from productive uses into government waste and pork barrel spending.

3. We will return any unspent funds from the various stimulus bills and oppose any further attempts at expanding the budget deficit in order to engage in so-called stimulus spending.

Businesses should be free to reap the rewards of their success and bear the consequences of their failure. No business is to big to fail. The government is the protector of private property and an arbiter of legal disputes, not a business manager. Any other role is beyond the federal government's legitimate function, distorts capital markets, and entails necessarily arbitrary and unjust intervention on behalf of favored business constituencies.

4. We will immediately seek to divest the federal government of all privately issued securities, such as preferred shares of financial institutions or automobile companies, procured during the recent crisis. (If they are truly a good investment, then private investors should gladly bid for the securities at a reasonable price.)

5. We will seek statutory prohibitions on the future ability of the federal government to take equity stakes in or purchase the debt of privately held companies.

6. This prohibition will extend to the Federal Reserve bank which will be statutorily constrained to purchasing and selling only the debt of the United States Treasury or debt issued by federal agencies. The Federal Reserve system will be subject to a yearly audit to itemize security holdings and to monitor compliance with these statutes.

Addressing the continual rise in health insurance premiums entails understanding the causes of these increases. The increases are being caused by government interference in the health care market in several ways - primarily by creating third party systems for routine payments. In other words, ordinarily, insurance is obtained for the event of a catastrophe, not as a mechanism to pay every expense. When individuals don't pay their own bills - demand goes up, and costs rise. However, tax incentives favor the provision of expensive health insurance to employees since benefits are not taxable. Government restrictions and mandates on these policies result in ever increasing costs being passed on through premiums and one size fits all policies.

7. We will remove incentives for businesses to provide health insurance benefits by treating all payments to employees, whether in the form of cash or benefits, as equal under the tax law. The government will not seek to "socially engineer" or favor any particular type of spending.

8. We will seek to minimize or eliminate mandates and regulations on insurance policies so as to create a competitive and diverse marketplace

9. We will remove restrictions on out-of-state policy offerings

10. We will seek to restore fairness to the legal system by encouraging monetary standards for malpractice settlements and encouraging "loser pays" rules to discourage frivolous lawsuits

In order to not increase the tax burden due to the equal tax treatment of benefit payments, with a view towards a reduction in the burden of overall government and the complexity of the tax code, and to acknowledge and affirm that an individuals earnings are his own

11. The first $5,000 of monthly income will be deemed non-taxable. This means that anyone making $60,000 or less will not pay income tax. The top marginal income tax rate will be capped at 20%

12. This non-taxable income provision will obviate the need for Health Savings Accounts, Flex spending accounts, or 401k plans and the like thus radically simplifying the preparation of tax forms by individuals and employees while expanding the tax benefit

The social security and medicare system has devolved into a capital destroying Ponzi scheme. It expropriates the earnings of individuals which it spends on current benefits rendering any future "guaranteed" payment uncertain while denying the capture of actual market interest. The social security "trust fund" does not contain actual cash or securities but merely IOU's that, ultimately, can only be satisfied through the expropriation of the earnings of future taxpayers. The magnitude of this unfunded liability and the government's accounting treatment would be grounds for criminal prosecution if undertaken by any private business. Although these programs, as a matter of justice, should be abolished, so many individuals have paid into this system and been guaranteed benefits, the reform of the program must be dealt with on a long term basis.

13. The social security and medicare system will be phased out over a period of at least 30 years.

a) Anyone currently under the age of 30 will no longer pay into the system but will not be guaranteed a benefit based on prior payments made.

b) Anyone over the age of 30 can choose either to (i) continue paying into the system which will result in some guaranteed payment based on a to be determined actuarial table or (ii) choose to opt out which means they will not have to pay but will not receive any benefit.

c) The government will seek to operate the wind down of the program according to generally accepted principles of actuarial accounting and under rules mandating the holding of actual capital and make the fund off limits from current spending other than on actual benefit payments to recipients.

The root cause of the boom-bust cycle is the expansion of credit created by the federal government founded upon the erroneous belief that counterfeit money is equal to capital. The mechanism for this process is the Federal Reserve system that purchases government debt on the open market with "reserves" created out of thin air. When these "reserves" are spent, it leads to chronic inflation, and depending on the severity of Fed policy, to artificial booms followed by inevitable busts. The United States should recognize that the Federal Reserve system has been an unmitigated disaster and resolve to end this experiment with fiat currency.

14. We resolve to restore the monetary system to a foundation of actual capital where domestic and international transactions are settled in specie, i.e., gold and silver as mandated by the Constitution

15. As part of that effort, we resolve to statutorily limit the Fed's role in its conduct of open-market operations and its provision of financing to private businesses, conduct yearly audits, and ultimately formulate a plan to wind down its operation

16. We seek to reduce "moral hazard" (encouraging risk by removing the possibility of failure) by replacing the FDIC with private insurance and abolishing Government Sponsored Enterprises or GSE's such as Fannie Mae and Freddie Mac which underwrite mortgage loans

The recent U.S. Supreme Court ruling upholding the First Amendment right of free speech should be celebrated not denigrated. The campaign finance laws' attempt to limit political speech in the name of "preventing special interest" money from entering the electoral process stems from flawed premises. It is government's power to tax, redistribute and regulate which draws inordinate sums of money into the political process. The Supreme Court was right to see these laws as dangerous attempts to stifle political debate. Rather than preventing persons from speaking their mind, we should resolve to limit the size of government's influence by reigning in its massive size and power.

17. The campaign finance laws should be repealed as attempts by the state and incumbent politicians to stifle debate and favor entrenched incumbency

18. Other forms of legislation that seek to prevent the free expression of ideas in the name of political correctness should be opposed. Any attempt to regulate speech on the Internet or other forms of media through so-called "fairness doctrines" will be vigorously opposed

Our nation desperately needs a principled foreign policy which holds American interests as an absolute priority, that overtly and explicitly names individual rights and free markets as a value, and that recognizes that America is a sovereign nation governed by the people of the United States, not the United Nations or any other international body. Furthermore, America must define its current goals in the mid-east and elsewhere and commit to a bold policy to achieve those objectives.

19. Recognize that the America's enemy is the ideology of Islamic totalitarianism not the tactic of "terror", and that Iran is the intellectual, financial, and military center of this movement

20. Refocus our foreign policy on the threat presented by Iran and its allies committing to total war if the threat is deemed clear and present

21. Recognize that a middle of the road foreign policy results in the loss of American lives while emboldening our enemies. The administration needs to clearly define our military and political goal in Iraq and Afghanistan with respect to any imminent or future threat to America or our allies, acknowledging a willingness to commit total war if there is deemed to be an actual threat or immediately withdraw if there is not

The United States government, in its role as the protector of individual rights and arbiter of legal disputes, must seek to orient its policies in such a way as to promote economic prosperity and the advancement of human life. In other words, it must recognize that the concept of "value" derives from a standard based on human life and that policies that favor the "environment" outside the context of human life are meaningless and destructive.

22. Policies which seek to violate property rights or restrict economic growth based not on legally adjudicated findings of demonstrable harm or violations of the rights of individuals, but rather on unfounded scientific speculation or the "rights" of non-humans, will be vigorously opposed .

23. The "Cap and Trade" bill or any derivative legislation that would cripple the American economy by taxing energy based on the unproven, if not disproven, claims of discredited climate scientists operating under the auspices of the United Nations, will be firmly opposed

24. We will seek to reduce and minimize regulations that stifle the creation, production and delivery of various forms of energy that hold us captive to foreign imports of oil and refined gasoline as well as increase our dependence on outdated sources of energy such as coal burning - including repealing regulations that render the construction and operation of nuclear power plants virtually impossible, repealing rules that restrict the construction of new domestic refineries, and repealing regulations that prevent the exploration and development of domestic oil and natural gas

While these policy proposals fall woefully short of any significant restoration of individual liberty, within the current political context, they are dramatic, and certainly should be regarded as a major step in the right direction. Importantly, the policies are all related in that they are predicated on a consistent moral foundation of individual rights and human happiness. They would, for once, establish the party that adopts them as the advocates of practicality and morality.

Quote of the Month

“We are fast approaching the stage of the ultimate inversion: the stage where the government is free to do anything it pleases, while the citizens may act only by permission; which is the stage of the darkest periods of human history, the stage of rule by brute force.” -- Ayn Rand